Derivatives are complicated financial products that helped turn Wall Street’s housing fraud into a global economic crisis. But today, almost a decade after the financial crash, the massive market in risky derivatives still poses a threat to the economy and taxpayer dollars.1

That’s why progressive champion Sen. Elizabeth Warren is teaming up with Sen. Mark Warner and Rep. Elijah Cummings to close loopholes, and give watchdogs the tools they need to protect us from big banks’ risky addiction to derivatives.2

We need to show that Americans stand with Sen. Warren and all who are fighting to finish the job of Wall Street reform, not Republicans trying to go backwards.

Stand with Sen. Warren: Protect Americans from risky derivatives.

The Financial Crisis Inquiry Commission found that unregulated derivatives drove the crisis and played a huge role in forcing taxpayer bailouts.3 Derivatives are financial products linked to an underlying asset, for instance bets on the future price of a commodity like corn. Alongside stocks and debt (like bonds), they are one of the three main buckets of financial products. But in the last few decades, big banks’ thirst for profits has led them to create increasingly complicated derivatives that contain hidden and unpredictable risks, fueling speculation and outright gambling. The financial crisis showed that without oversight, risky derivatives can take a bad situation and make it 100 times worse.4

The Commodities Futures Trading Commission (CFTC), which is tasked with regulating derivatives, is horribly underfunded and doesn’t have the tools it needs to enforce laws. Bad decisions by its regulators have also opened massive loopholes. And on top of it all, taxpayers today are still potentially on the hook when risky bets on derivatives go sour.5The 2010 Dodd-Frank law was a step in the right direction, but Sens. Warren and Warner want to finish the job.

Their new bill would allow the CFTC to collect user fees from firms the way the SEC does, and give the agency more power to levy big fines. It would close loopholes that prevent oversight of some markets and allow banks to skirt CFTC rules. Finally, it would protect taxpayers by forcing financial firms to have sufficient money to cover their bets and ending the favorable treatment of derivatives in bankruptcy – right now, banks can make risky bets because even if the other party collapses, they will be among the first to get paid back.6This bill will help prevent another derivatives tsunami from swamping financial markets and leaving taxpayers on the hook, and we need to show that Americans support it.

Stand with Sen. Warren: Protect Americans from risky derivatives.

A shocking failure to oversee a derivatives market in the trillions of dollars contributed to the last crash, according to the Financial Crisis Inquiry Commission. As Wall Street’s housing fraud became clear, the millions of complicated, expensive derivatives contracts between too-big-to-fail banks escalated the panic.7 As Sen. Warner put it, “Reckless derivatives trading at AIG helped precipitate the global financial crisis of 2008 and usher in the Great Recession.”8

Financial firms count on bills like this seeming too complicated to capture public imagination, allowing their lobbyists to block and weaken them without meeting popular resistance. We must show that Americans are paying attention, demand action, and won’t back down.